HR Tips: DOL reports related to employment-related contract provisions and using AI recruiting and hiring tools

Special enforcement report on contract provisions

On October 15, the Department of Labor (DOL) top lawyer announced that the agency would target seven specific employment-related contract provisions that it considers "coercive" and could discourage workers from exercising their rights under federal workplace laws.

Here are the seven provisions:

1. Requiring workers to waive wage and hour rights

   The DOL report says that clauses that waive rights to recover damages for minimum wage and/or overtime violations or shorten the time workers have to bring claims are illegal.

2. Misclassification of workers as independent contractors

   Misclassification of workers has long been a DOL priority and this serves as a reminder to employers that even when a worker agrees to be classified as an independent contractor, it is not determinative. The working relationship determines classification status and the DOL's multi-factor "economic reality" test must be used. Other agency tests and state rules can be even more stringent.

3. Indemnification provisions that shift liability to workers

   Contract provisions that require a worker to reimburse employers for legal fees and costs incurred in defending against the worker's claims, even if the employer has violated laws and regardless of whether the employer prevails, are illegal.

4. "Loser pays" provisions

   Sometimes called "prevailing party" clauses, some contracts require workers to pay the employer's attorney's fees if they lose a legal dispute. According to the report, these provisions violate wage and hour laws, which contain only one-sided fee-shifting clauses in favor of employees who prevail.

5. "Stay-or-pay" provisions

   "Stay or pay" provisions require workers who leave a job before a set period to reimburse the employer for certain expenses such as training, signing bonuses, moving expenses, or tuition reimbursement. The DOL stresses labor laws mandate that wages must be paid "free and clear," with no strings attached.

6. Confidentiality, non-disclosure, and non-disparagement provisions

   The report warns employers about contract clauses that have broad restrictions on what workers can discuss or disclose to co-workers or third parties, such as working conditions or reporting violations, and assisting in investigations outside the organization.

7. Requirements that workers report safety concerns to their employer before contacting a government agency

   The report reminds employers that federal law upholds workers' rights to report safety concerns directly to government authorities.

What should employers do?

The report does not carry the force of the law but reflects the types of contract clauses that may be the future focus for the DOL. With an election looming, some employers may opt for a wait-and-see approach before making any changes to their agreements. But some issues, such as worker misclassification, have been DOL enforcement priorities for many years and changes may be slow under a new administration. It would a good idea to review the language, including the "fine print" of all contracts, policies, applications, forms, and other agreements and discuss the risks with your attorney.

AI recruiting and hiring tools - ten focus areas

On September 24, the DOL announced the publication of AI & Inclusive Hiring Framework, which sets forth ten "Focus Areas" for employers to consider when using AI recruiting and hiring tools to minimize the risk of algorithmic discrimination against disabled job seekers. The Framework was developed and published by the Partnership on Employment & Accessible Technology ("PEAT"), an entity funded by the DOL's Office of Disability Employment Policy.

The 10 focus areas are:

1. Identify employment and accessibility legal requirements
2. Establish roles, responsibilities and training of staff
3. Inventory and classify the technology
4. Work with responsible AI vendors
5. Assess possible positive and negative impacts
6. Provide accommodations
7. Use explainable AI and provide notices
8. Ensure effective human oversight
9. Manage incidents
10. Monitor regularly

Under each focus area, DOL and PEAT provide key practices and considerations for employers to implement as they work through the AI framework. While the framework does not have the force of law, employers should regularly assess their AI use and the impact of AI systems on employees and applicants as regulators at all levels of government are enacting or proposing regulations related to AI.